Quality not quantity is the goal as online advertising responds to recession

MEDIA & MARKETING:In the US, the spend on digital advertising will overtake print for the first time this year, writes SIOBHAN O'CONNELL

NEW RESEARCH by iReach Market Research and advertising agency Carat indicates that four out of five people prefer to read a newspaper or magazine in print rather than electronically. With Apple’s iPad set to launch next month, the future of reading is a subject exercising the minds of publishers around the world.

Whatever about consumer preferences, the growth of online advertising spend shows no sign of abating. In the United States, the spend on digital advertising will overtake print for the first time this year. In the UK, internet ad spend – mostly search advertising – exceeded spend on television, press, display and direct mail last year.

But according to Dermot Hanrahan, chief executive of Electric Media, an online sales network, digital advertising has not escaped the impact of the recession.

“The number of snouts in the trough has been increasing, and many websites are not experiencing growth,” he says. “Some people launched websites expecting rich pickings, and they have been sorely disappointed. There is far too much inventory available in this market.”

Hanrahan, a veteran media entrepreneur, established Electric Media two years ago in partnership with The Irish Times. His firm recently acquired rival firm Sales Online, and the new entity is now the largest online sales house in the State, representing around 60 websites.

Hanrahan was the former boss of Dublin radio station FM104 and grossed around €3 million when the station was bought by Scottish Radio Holdings in 2004. He was a co-founder of the online advertising agency ICAN, and he also set up the website Entertainment.ie, where The Irish Times is also an investor.

Electric Media represents the websites of TV3, The Irish Times, MyHome.ie, AA Ireland, Irish Rail and others. Advertising agencies ask Electric Media to put together a display advertising campaign across the sites it represents that will deliver the agency’s client target audience.

Irish people don’t just look at Irish websites. And the chances are that, if you’re surfing an American website, you could be served up an advertisement from an Irish company. These ads are facilitated by so-called blind networks, which offer low pricing to advertisers in exchange for brands relinquishing control over where their ads will be seen.

Blind networks achieve their low pricing through large bulk buys of inventory combined with campaign optimisation and ad-targeting technology. If the advertiser doesn’t mind on which website their display advertisement will be seen, the cost per thousand impressions (CPM) can be as low as €1. Buying into an Irish website in the Electric Media portfolio, where the advertiser knows exactly the type of content surrounding their ad, costs €12 to €13 per CPM.

Also queering the pitch for display ads is search advertising on Google. However, Hanrahan insists that display advertising on the “premium” Irish sites he represents is a must for firms that want to build their brand.

“You can’t beat Google if you are going to measure your advertising by an immediate response. But it is an absolute fallacy that online advertising is only about direct response. If you are going to say that direct response is the only kind of advertising that works, you are saying that when Guinness runs a TV commercial, it is a failure unless the viewers get out of their chairs, go straight to the pub and buy a pint. Getting your brand into someone’s mind is worth paying for.”

And it’s not always the sites with the most traffic that work best for advertisers, according to Hanrahan. In his estimation, it’s quality not quantity that matters.

“I can think of two publisher websites in our own network. One of them is a very powerful brand with three million page impressions each month. The other is less well-known, with 60,000 page impressions a month, and we can bring in more money to the smaller site, such is the demand for the smaller site’s inventory.”

Of the online business, Hanrahan concedes it’s an introspective medium. “People who are in it believe that the whole world revolves around online advertising, rather than seeing where it fits into the whole media space. I’m around long enough to realise online is simply part of the marketing mix.”

For immediate branding impact, the Irish Daily Mail is sticking with the tried and tested television medium. This week the newspaper has unveiled a TV commercial, including a version as Gaeilge for TG4, to promote the content of the paper each day of the week. Devised by MC Saatchi in London and produced in Dublin, the campaign will run for 12 months.

siobhan@businessplus.ie